NGT Refuses to give Direction for Extension of Power Purchase Agreement of Welspun Energy’s Mirzapur Thermal Power Plant

In a major blow to the State of Uttar Pradesh (U.P.) and Welspun Energy, the National Green Tribunal refused to give any direction regarding the extension of ‘Power Purchase Agreement’ of the said power project, the Environmental Clearance of which was quashed in December, 2016.

Senior Counsel Mr. Pinaki Mishra (appearing for M/s Welspun Energy U.P. Pvt. Ltd) sought an interim order to direct the State of U.P. who has entered into power purchase agreement (PPA) with the project proponent to extend the period of the transaction for further period, subject to result of the Review Application. Additional Solicitor General Mr. Tushar Mehta represented the State of Uttar Pradesh and Ministry of Environment, Forests and Climate Change (MOEFCC).

The interim relief was sought in a review application filed by MOEFCC, State of U.P. and Welspun Energy in the matter where Environmental Clearance (EC) of the 1320 MW Mirzapur Thermal Power Plant was quashed by the Hon’ble Tribunal presided by Justice U.D. Salvi and Justice Ranjan Chatterjee with direction to the project proponent Welspun Energy to restore the area to original condition. 

While the review application is yet to be heard on maintainability and on its merit, the Tribunal presided by Justice Dr. Jawad Rahim and Justice Ranjan Chatterjee gave a detailed hearing on the interim relief sought by the Review applicants because they claimed that the PPA between State of U.P. and Welspun Energy will expire on 31st March, 2017-failing to renew which the project may become infructuous. There was a specific direction which was sought by the State of U.P. and Welspun Energy from the Tribunal to direct the State to renew the PPA.

Advocate Parul Gupta, representing the original appellants in the matter raised serious objection on the directions sought and submitted that the directions sought by the review applicants is entirely within the jurisdiction of Uttar Pradesh State Electricity Regulatory Commission (UPERC) and once the EC has been cancelled by this Tribunal by the order under review, no permission could be granted to revalidate or validate agreement which falls consequently to quashing of the EC.

“The fact situation undoubtedly is that the Judgment in Appeal No. 79/2014 dated 21/12/2016 has neither been annulled/modified/or interfered in any appeal action. Therefore, it needs no mention that all concerned and those brought within the mischief of direction of the Tribunal are aware of the consequences flowing from the ultimate decision taken in the said appeal”, The bench observed.

The Tribunal denied to give any such direction and stated the following concluding the order:

“We do not wish to express any opinion on that but would like to conclude by observing that the power purchase agreement referred to in the application being a bi-parte agreement between the Project Proponent and the purchaser of the electricity by the State of UP. They are competent to transact further. It is commercial transaction and therefore, they may on their own violation transact and agree upon such terms and conditions with regard to renewal etc by mutual consent for which no specific direction from this tribunal may be necessary. Liberty to transact further terms and conditions may be permissible under the original agreement as may be suitable for them for extension of period etc for which there need not be any specific direction from this Tribunal to the parties. We further conclude by observation that any order for that matter, the expression does not mean to affect or prejudice the contention of the Review Application or the appellant to be interpreted.”

The order dated 31st March, 2017 was pronounced on the same day, however, is made available on NGT website on 21st April, 2017, and can be accessed here.